Permanent employment claim: how to challenge a fixed-term contract

Fixed-term contracts are increasingly common in Germany – and so are lawsuits to convert them into permanent employment. If you believe the time limit on your contract is invalid, you can file a “permanent employment claim” (Entfristungsklage) within three weeks after the contract ends. Miss the deadline, and the fixed term becomes legally binding. This guide explains when a fixed-term contract is (un)lawful, how an “Entfristung” claim works, and when a lawsuit migh be worth cost and risk.

Key takeaways

• A “permanent employment claim” asks the labour court to declare the agreed fixed term to be invalid. If successful, the employment contract then becomes a permanent contract – with full protection against unfair dismissal.
• The claim must be filed within three weeks after the agreed end date of the fixed-term contract (§ 17 TzBfG).
• Success depends on whether the employer met the legal requirements under § 14 TzBfG or other special rules (e.g. partial retirement, pension).
• Important: If the employee is not protected by the Dismissal Protection Act (KSchG), the lawsuit may be pointless – the employer could simply terminate the now-permanent contract without cause.
• A settlement with severance (e.g. in court) is possible, but there is no automatism for a payout. So, the decision depends, as so often, on your individual case.

Types of fixed-term employment contracts

There are different types of fixed-term employment contracts. These are the two most important forms:

• Time-limited contract (Zeitbefristung): The employment ends automatically after a specific date.
• Purpose-limited contract (Zweckbefristung): The contract ends once a specific task is completed – e.g. project work, parental leave cover, or temporary replacement during illness.

Requirements for a valid fixed term

The key provision is § 14 TzBfG. A fixed term is valid if:

• There is an objective reason, such as temporary workload, substitution, probation, or settlement in court.
• A fixed term without objective reason is allowed only for up to 2 years – provided the employee has never worked for the same employer before.
• Start-ups may fix terms up to 4 years without reason (not applicable to restructuring spin-offs).
• Workers aged 52+ who were unemployed for at least 4 months may be hired on fixed-term contracts up to 5 years without reason.
• Every fixed term must be in writing before work begins – otherwise it is invalid and the contract is permanent by law.

What is a permanent employment claim?

If the employee argues in court that the fixed term is invalid (Entfristungsklage), he must file a claim at the labour court. This must be done within three weeks after the stated end of the contract (§ 17 TzBfG). The court then decides whether the fixed term is valid.

If the employee wins, the contract converts into an unlimited contract (§ 16 TzBfG). It no longer ends automatically – the employer would need to issue a formal dismissal.

Legal consequence

Once the contract becomes permanent, dismissal rules apply. If the company has more than 10 employees and the worker has been employed more than 6 months, the Dismissal Protection Act applies. The employer must then give operational, personal, or misconduct-based reasons for any dismissal.

Chances of success

Success depends on whether the fixed term meets the legal test:

1. Was a valid objective reason present?
2. If not: does one of the statutory exceptions apply (e.g. new hire, start-up, 52+ rule)?
3. Were all formalities (especially written form) met?

A claim may be strategically unwise if dismissal protection does not apply. In small companies or probation periods, the employer could simply terminate the (now permanent) contract without stating any reason – unless special protection applies (pregnancy, disability, works council, etc.).

Severance in a permanent employment claim

Like most labour disputes, many cases end in a negotiated settlement. A severance payment depends on bargaining power: the stronger the employee’s legal position, the higher the employer’s motivation to avoid a court ruling that creates a permanent job.

There is no statutory severance right – it is purely negotiable. Employees may use the lawsuit as leverage, especially if the employer is already considering staff reductions.

Frequently asked questions (FAQ)